SEP IRA Contribution Calculator

Enter your net self-employment income, business structure, eligible employee count, and eligible employees’ total compensation. The calculator uses those details to estimate your own maximum contribution and the employer cost of contributing for employees. The “other retirement contributions” input affects the displayed efficiency score; it does not reduce the maximum contribution or tax-deduction results in the supplied calculation.

With the default inputs—$150,000 of net self-employment income, the self-employed option, no eligible employees, and no other retirement contributions—the calculator reports:

• Your Max Contribution: $25,586
• Employee Cost: $0
• Total Plan Cost: $25,586
• Tax Deduction: $25,586
• Efficiency Score: 37 out of 100

The estimate applies the self-employed adjustment before the 20% contribution rate: $150,000 × 92.35% = $138,525 of net earnings for the calculation. The estimated deduction for half of self-employment tax is $150,000 × 92.35% × 50% × 15.3% = $10,597. The adjusted amount is about $127,928; 20% of that is about $25,586. The calculator rounds the displayed contribution to the nearest dollar.

A SEP IRA is funded by employer contributions. If you are self-employed, you act as both employer and employee, but you do not calculate your own contribution as a simple 25% of gross business income. The contribution rate is effectively 20% of adjusted net earnings after the self-employment-tax adjustment.

For employees, SEP contributions are generally employer contributions rather than salary deferrals. An employee does not choose a contribution rate from their paycheck under the ordinary SEP arrangement. If an employer contributes for itself, it generally must contribute the same percentage of compensation for eligible employees.

This can make a SEP IRA attractive to a business with few or no eligible employees, but employee coverage can raise the plan’s total cost. Compare it with a SIMPLE IRA contribution calculator or a SIMPLE IRA calculator if you want to evaluate a plan with employee salary deferrals and matching contributions.

For 2026, this calculator limits SEP contributions to the lesser of 25% of an employee’s compensation or $72,000. The compensation limit used in the plan calculation is also subject to an annual cap. For a self-employed person, the effective rate is generally 20% of adjusted net earnings, subject to the same annual contribution ceiling. The IRS explains SEP plan rules and limits in its SEP plan guidance.

A SEP IRA does not have a separate age-50 catch-up contribution in the way some salary-deferral plans do. The calculator includes a catch-up input, but the provided computation does not use it. Do not interpret that field as increasing the 2026 SEP maximum.

Employee eligibility depends on plan terms and federal rules. Common eligibility criteria include age 21, working for the employer in at least three of the last five years, and receiving at least the applicable minimum compensation. A plan can use less restrictive criteria, but not more restrictive ones than permitted. Confirm the plan document’s rules before deciding which workers to include.

The calculator estimates employee cost using the same effective contribution rate applied to eligible compensation, subject to the compensation cap. It assumes a contribution for every eligible employee based on the entered employee count and total compensation. It does not determine eligibility for you or account for special plan-document provisions.

The following figures illustrate the calculator’s self-employed formula at other income levels. They are calculated estimates, rounded to the nearest dollar; the $150,000 result is the calculator’s supplied default output.

A higher income does not increase the contribution indefinitely. Once the applicable limit is reached, additional compensation does not raise the maximum SEP contribution.

The calculator uses different equations for a self-employed person and an incorporated business. Its business-type selection determines which formula applies.

Net earnings for SEP calculation =
net self-employment income × 0.9235

Adjusted net earnings =
net earnings for SEP calculation
− deduction for one-half of self-employment tax

Self-employed maximum contribution =
the smaller of (adjusted net earnings × 20%) or $72,000

Employee contribution cost =
eligible compensation, subject to the compensation cap
× effective contribution rate

For an incorporated business, the calculator applies a 25% contribution rate to compensation, subject to the compensation and annual contribution limits. The calculator’s tax-deduction result equals total plan contributions in its model. Your actual deduction can depend on tax rules, business structure, and return details; the estimate is not a tax-return calculation. The IRS describes deductible employer contributions in its SEP tax information.

A SEP IRA can be straightforward when contributions vary with business profits and the business has few eligible employees. The tradeoff is that employer contributions may need to cover eligible employees at the same contribution percentage as the owner. A SEP IRA calculator can help compare a broader set of plan assumptions.

A SIMPLE IRA allows employees to defer part of their pay and generally requires the employer to make a matching or nonelective contribution. A SIMPLE IRA contribution calculator can estimate the effect of changing employee deferrals. A business considering a defined-benefit arrangement can also review a pension contribution calculator.

Tax treatment is another tradeoff. Traditional retirement contributions can reduce taxable income now, while withdrawals are generally taxable later. Roth accounts use different tax timing; read Roth IRA vs. traditional IRA: which saves more taxes? before comparing account types.

Is a SEP IRA contribution the same as 25% of self-employment income?

No. For a self-employed person, the contribution is generally calculated using an effective 20% rate on adjusted net earnings after the self-employment-tax adjustment. Applying 25% directly to gross business income overstates the usual limit.

Does the $72,000 limit apply to each employee?

This calculator caps the 2026 SEP contribution at $72,000 per participant, subject to the compensation-based limit and plan rules. The owner and each eligible employee have separate contribution calculations.

Does the calculator include employee contributions from salary?

No. A SEP IRA is generally funded by employer contributions, not employee salary deferrals. The employee-cost result estimates the employer’s cost of contributing for eligible workers.

Does a SEP IRA have a catch-up contribution after age 50?

No separate SEP catch-up contribution is included in the supplied 2026 rules or this calculator’s computation. The catch-up input does not change the displayed result.

Should I choose a SEP IRA or SIMPLE IRA?

A SEP IRA may suit a business that wants flexible employer contributions, while a SIMPLE IRA allows employee deferrals but requires employer contributions under its rules. Compare employee participation, employer cost, administration, and contribution limits before choosing.

Is the displayed tax deduction guaranteed?

No. The calculator treats total plan cost as the tax deduction, but the amount deductible on a tax return depends on applicable tax rules and the business’s circumstances. Confirm the deduction with current IRS guidance or a qualified tax professional.

Run the estimate with your actual net earnings and employee details, then check the plan’s eligibility rules and contribution deadline. Compare the employer cost with a SIMPLE IRA contribution calculator if employees could benefit from salary deferrals. For a separate account-level projection, use an IRA calculator or review how retirement contributions fit into your overall plan.